Belfast Telegraph

Former taoiseach Brian Cowen 'failed to demand answers' over Anglo Irish Bank

Former taoiseach Brian Cowen has been criticised for failing to use a golf outing with Sean FitzPatrick to demand answers about the looming crisis at Anglo Irish Bank.

Pat Rabbitte, former Labour leader, also attacked members of the Oireachtas banking inquiry for not asking the retired politician to explain why he did not press the banker for a private briefing when they met in Druids Glen in July 2008.

"It seems to me the whole purpose of the encounter was to ask FitzPatrick what the hell is going on in your institution," Mr Rabbitte said.

Mr Cowen's game and dinner with Mr FitzPatrick and two other Anglo figures two months before the bank guarantee has been the source of ongoing controversy.

The former Fianna Fail leader has said "God is his witness" that they only talked generally about the economy.

Mr Rabbitte said not only should Mr Cowen have tried to get information on Anglo as its value tanked on world stock markets, but it was the job of the banking inquiry to ask why he did not.

"I say that without in anyway imputing any dishonesty to the former taoiseach because I believe he is an honest man," Mr Rabbitte said.

L ate finance minister Brian Lenihan also came in for criticism as Mr Rabbitte joined Tanaiste Joan Burton at the banking inquiry with the pair claiming he should have acted sooner to combat Ireland's financial meltdown and financial collapse.

Both claimed the bankruptcy of Northern Rock in 2007 should have been a catalyst to plan for a rescue of Irish banks.

Ms Burton claimed an alternative to the bank guarantee would have been to let the most exposed lenders go bust or force them into nationalisation and refuse to pay back subordinated debt.

"The guarantee was sprung overnight. We woke up the next morning and it was presented as a fait accompli," the Tanaiste said

"All bank failures are costly. I do not believe that the level of cost that was incurred would have been incurred (under the Labour Party). I can't give you a figure but it would have been significantly (lower)."

Mr Rabbitte, Labour leader from 2002-07, said he had no inside knowledge on the banks that prompted him to ardently fight the guarantee of 440 billion euro worth of deposits and debts in the Irish banks.

"This was just such an enormous insurance bet that we were wagering the deeds of the country on it never being called in," he said.

The retiring politician also had harsh words for Mr Lenihan.

"I would be critical of the minister of the day in that I'm not sure what he was doing driving around south Dublin eating garlic late after midnight shortly before the collapse," Mr Rabbitte said in reference to the minister's infamous and unannounced call to economist David McWilliams' home.

The Labour veteran said he thought it would have been more appropriate to ask questions of the banks and hatch a reaction plan.

"As far as I can see there are some people - I don't think they were dishonest - at the top of the banks themselves which were behaving recklessly but did not know the depth of the crisis," Mr Rabbitte said.

Mr Rabbitte also admitted "it j ust did not occur" to him that banks could collapse after 15 years of growth, survival of the bubble, investment in infrastructure and access to cheap money.

In sometimes fraught exchanges with Fianna Fail members of the inquiry the Labour figures were repeatedly asked to defend the party's policies while in opposition and electioneering.

Ms Burton said: "Nobody in 2007 actually anticipated the entire collapse of the entire banking and construction system.

"We knew there were difficulties ahead and in fact our detailed manifesto sets out in detail how the budgetary policy would be driven by respect for the guidelines in respect of spending from the European Union."

In her written submission to the inquiry, the Tanaiste used a similar argument to Taoiseach Enda Kenny in blaming Ireland's economic meltdown on the Fianna Fail-led governments' boom and bust policies.

"What had been a healthy economy with sound public finances, strong export led growth, full employment and a healthy balance of payments position was now an uncompetitive, high price economy driven by a credit fuelled housing bubble that would eventually crash and burn.

On the bank guarantee Ms Burton was repeatedly pressed for other options before Mr Rabbitte stepped in to say it was ridiculous to suggest the Labour Party - the only party to oppose the scheme - had a "refined alternative" to it at the time.

Ms Burton also pushed a policy, which she had put to Brian Cowen when he was finance minister, to impose a 1% tax on contracts for difference - the secret share dealing option which allowed Sean Quinn to gamble 2.4 billion euro on doomed Anglo stock.

She said it would not have cured problems in the financial sector but it may have encouraged some investors to back of the high risk trades.


From Belfast Telegraph